Homeownership Rate Increases in Québec but Remains Well Below the Rest of Canada

Statistics Canada recently released the results of the 2011 National Household Survey, which includes information about the homeownership rate. This rate measures the proportion of homeowner households among total private households. In this document, we will examine its evolution in Québec from 1971 to 2011. This evolution is consistent with that of the main determinants of homeownership.

Québec’s Homeownership Rate is Rising but Remains the Lowest in Canada

Like the inhabitants in most of Canada’s other provinces, a growing proportion of Quebecers became homeowners between 1971 and 2011. The number of households in Québec who rented their dwelling grew from 840,000 in 1971 to more than 1.3 million in 2011, an increase of 55 per cent, while the number of households who owned their dwelling increased from 760,000 in 1971 to nearly 2.1 million in 2011, an increase of 173 per cent. Thus, the homeownership rate in Québec has been steadily rising since the early 1970s, growing from 47.4 per cent in 1971 to 61.2 per cent in 2011. This represents an increase of almost 14 percentage points, the largest increase among Canada’s ten provinces.

The QFREB Barometers for the third quarter of 2013 are now available on our website. Read this publication to learn about the recent performance of the real estate market in the province and in each of its six metropolitan areas. To subscribe to the QFREB Barometer and be notified upon its publication, click here.

Please note that the sociodemographic profiles of the regions have been updated and now reflect the results of the 2011 census.

Also, improvements were made to the geographic boundaries of the Québec City Metropolitan Area. The North Shore of Québec City was divided into two main areas: the Agglomeration of Québec, which includes, in accordance with the definition from the Ministère des Affaires municipales, Régions et Occupation du territoire, the city of Québec and the two demerged cities of L’Ancienne-Lorette and Saint-Augustin-de-Desmaures; and the Northern Periphery of Québec City, which includes certain municipalities of the Côte-de-Beaupré, La Jacques-Cartier and L’Île-d’Orléans RCMs, as well as the city of Neuville.

The Market Analysis Department of the Québec Federation of Real Estate Boards is pleased to announce that it has created a Facebook page. It contains all of our publications and enables you to keep up-to-date on the release of Québec real estate market statistics. Feel free to follow us and share your feedback.

Sales and Prices Increase in the Agglomeration of Saint-Hyacinthe in the Third Quarter of 2013

There were 111 residential sales transactions concluded through the Centris® system in the agglomeration of Saint-Hyacinthe in the third quarter of 2013. This represents a 10 per cent jump in sales compared to the same quarter last year and the second consecutive quarterly rise in sales in the agglomeration. In fact, this was a remarkable increase given that sales across the province remained stable.

This increase can be solely attributed to the performance of the condominium market, as the number of condo transactions grew from 15 in the third quarter of 2012 to 33 in the third quarter of 2013. Sales of single-family homes fell slightly, from 69 transactions to 66. Finally, 12 plexes changed hands in the third quarter of 2013, compared to 15 one year earlier.

The median price of single-family homes increased by 2 per cent in the agglomeration of Saint-Hyacinthe in the third quarter of 2013 to reach $208,469. This was the sixth consecutive quarterly increase. The median price of condominiums increased for a fourth consecutive quarter, growing by 3 per cent to reach $165,000.

Spectacular Rebound in Home Sales in the Vancouver and Toronto Areas in September

Residential sales rose sharply in the Greater Toronto (7,411 transactions) and Greater Vancouver (2,524 transactions) areas in September 2013, with respective increases of 26 and 64 per cent compared to September of last year. In comparison, the Montréal area registered an 8 per cent increase in sales, with 2,393 transactions concluded in September. This was the third consecutive monthly increase in sales in Toronto after thirteen monthly decreases, and the fifth consecutive increase in Vancouver (including three consecutive increases of more than 40 per cent) after registering decreases every month since the end of 2011. In the Montréal area, this was the second consecutive increase in sales.

As for prices, the average MLS® residential price, according to The Canadian Real Estate Association (CREA), increased by 9 per cent in Vancouver and by 6 per cent in Toronto in September 2013, while in Montréal, the weighted average price fell by 2 per cent.

To see the MLS® sales results for Canada and its provinces for the month of September, read the “Economic News” section below.

The Increase in Interest Rates Should Have a Limited Impact on the Canadian Economy

After sitting at historically low levels for an extended period of time, interest rates have recently started to increase in Canada, rising from 5.14 per cent to 5.34 per cent in August for the posted rate for a five-year term mortgage. Although this increase is considered modest, some economists and observers expressed concern about the impact it may have on the Canadian economy.

In a recent study, Desjardins Economic Studies assessed the impact of an interest rate increase in Canada. One of the direct consequences is an increase in mortgage payments for households. According to their estimates, the average mortgage payment could increase by $67 per month per $100,000 of mortgage value within five years1. The increase in rates would also contribute to a slowdown in the demand for properties and, by extension, a slowdown in residential real estate price increases, making housing less accessible. However, the study points out rightly that an increase in interest rates is generally a sign of economic recovery that is normally accompanied by an improvement in three determining factors for the real estate market: consumer confidence, employment and income. Furthermore, according to Desjardins, the increase in interest rates should remain moderate in the upcoming quarters, which would enable households to adjust gradually. Finally, the study points out that the increase in rates is also beneficial for the Canadian economy by helping to avoid excessive debt and encourage savings.

According to a report published by TD Economics, the outlook for various housing markets in Canada has improved after sharp increases in sales and prices since the start of the summer in certain areas. However, the momentum seen in recent months should fade by the end of 2013.

In recent months, the strongest markets have been those with the lowest level of excess inventory: Vancouver, Victoria, Calgary and Edmonton. In contrast, activity in the Ottawa, Montréal and Québec City markets has been relatively stable, as they have experienced rapid construction in the past decade that now seems to be slowing. Analysts at the TD Bank predict that mortgage rates will rise in the coming years, helping to stabilize real estate activity in Canada. This increase in rates will result in a gradual decrease in affordability in 2014 and 2015. Not surprisingly, the impact of the increased interest rates will be more pronounced in more expensive markets.

However, condominiums will remain affordable in all of the country’s main markets, even Vancouver. The advantage of condominium affordability will help to absorb the large supply of new dwellings in Toronto, Montréal and Québec City.

Finally, an overview of the impact of condominium overbuilding was specially prepared for the province of Québec, in which the condo markets in the Québec City and Montréal metropolitan areas are analyzed.

Third Monthly Increase in Residential Sales in Canada in September 2013

According to The Canadian Real Estate Association (CREA), there were 38,147 residential MLS® sales transactions in Canada in September 2013, an 18.2 per cent increase compared to September 2012. This was the third consecutive increase in sales after eleven months of decreases.

Geographically, only the provinces of New Brunswick (-5.2 per cent), Prince Edward Island (-11.6 per cent) and Nova Scotia (-7.6 per cent) posted a sales decrease. In contrast, all provinces located west of the Maritimes registered an increase in sales in September 2013. The largest increases were in British Columbia (+43.2 per cent), Alberta (+29.7 per cent) and Ontario (+26.9 per cent).

According to CREA, the average price for all residential MLS® properties sold in Canada in September reached $385,906, an 8.8 per cent increase compared to September 2012. This was the largest increase in average price since July 2011.

The largest increases in average price were in the provinces of British Columbia, Alberta and Ontario, where prices rose by 8.6, 7.4 and 7.0 per cent, respectively, compared to September 2012. Québec registered a slight decrease, as its weighted average price fell by 1.2 per cent.